Jack Smith
MM Enterprises USA, better known as MedMen Enterprises, announced its intentions to purchase OutdoorPartner Media Corporation in a reverse takeover, with the combined company becoming publicly traded in Canada.
MedMen says it will exercise a “reverse takeover,” (RTO), in which shareholders of a private corporation purchase a public company. What is interesting about MedMen’s proposed transaction is RTO’s usually coincide with the company that is being acquired to be listed on an exchange. Currently, OutdoorPartner Media is not listed on any exchange, but it is public.
In a press release, MedMen CEO and co-founder Adam Bierman called the binding letter of intent “an important milestone” for the Los Angeles-based company.
“A major U.S. cannabis company is set to be publicly traded on a bona fide stock exchange,” Bierman said. “For nearly a decade we have been at the leading edge of the modern cannabis industry, putting ourselves in a dominant position in the most significant cannabis markets in the U.S.; California, Nevada and New York.”
The company operates in three states, including California, where it has seven licensed stores. MedMen calls itself “one of the most dominant players in the fast-growing cannabis industry,” but does not give any data to back up that claim, including revenue or funding statistics. MedMen recently noted that it’s valuation made it the first cannabis unicorn due to a recent investment in the company.
The news comes on the heels of former Speaker of the House John Boehner joining the board of directors of Acreage Holdings. Boehner, who had been staunchly anti-cannabis, said on Twitter that his “thinking on cannabis has evolved.”
According to a Pew Research study done in October, 61 percent of Americans believe marijuana should be legal, the highest percentage seen in history. Younger age groups were more likely to view marijuana legalization more favorably, with 70 percent of millennials saying it should be legal. Only the Silent Generation, those who were born between 1920 and 1940, believe it should be outlawed, with 58 percent opposed to legalization, compared to 35 percent in favor.
After the takeover happens, MedMen Enterprises will become both a subsidiary of the publicly traded company and effectively become the public company itself. It noted in the release one of the conditions after the deal is completed is that the public company will be listed on the Canadian Securities Exchange. So far, neither company has applied for a listing on the CSE or any other exchange.
The company also states that it has entered into “an engagement letter,” where it will conduct a private placement offering of subscription receipts” to accredited investors prior to the reverse merger. These subscription receipts will then turn into common stock of the public company after the reverse merger is completed.
The common stock will have subordinated voting rights, the company said. It did not add whether it would have additional forms of equity with higher forms of voting rights.
Canadian investment banks Cormark Securities and Canaccord Genuity are acting as co-book runners for the deal and will help with the private placement. An unnamed source recently told Green Market Report that Canaccord had walked away from the deal because MedMen wanted a $2 billion valuation when it started trading as a public company – something Canaccord disagreed with, but the rumor was not verified.
